Prior Insurance Provision

Hunton & Williams insurance partner Syed Ahmad commented in a July 19, 2017, Law360 article concerning the Second Circuit Court of Appeals’ recent decision in Olin Corp. v. OneBeacon America Insurance. In the decision, which is the subject of a July 26, 2017, Hunton blog post, the Second Circuit agreed with Olin that its payments toward remediating contamination at five manufacturing sites implicated a series of excess policies issued by Lamorak Insurance Co., formerly OneBeacon.

The ruling adopted the principles articulated by New York’s highest court, the Court of Appeals, in last year’s landmark Viking Pump decision. Hunton & Williams LLP partner Syed Ahmad noted that the ruling appeared to be based on specific language in Lamorak’s policies, but said the appellate panel’s extensive discussion of Viking Pump indicates that insurers whose policies contain different language will have a tough time fighting the all sums regime in future cases.

“[T]he court relied on much broader principles and cited extensively to the reasoning in Viking Pump, which calls into question if similar efforts to avoid all sums will be accepted even in cases with different policy language,” Ahmad said.

Last week, the Second Circuit remanded environmental coverage litigation between Olin Corporation and OneBeacon based on its conclusions that (1) all sums allocation applied and (2) a prior insurance provision allowed OneBeacon the opportunity to show that prior excess insurers had made payments for the same claims, thereby reducing OneBeacon’s liability for Olin’s remediation costs at five manufacturing sites.

The district court had calculated OneBeacon’s liability on a pro rata allocation. Based on the New York Court of Appeals’ intervening decision in Viking Pump (previously covered here, the Second Circuit found that an all sums allocation should apply. The decision thus allows Olin to obtain full indemnification under OneBeacon’s policy for amounts spent to remediate the manufacturing sites, up to the limits of that policy. Because the district court had applied a pro rata allocation based on pre-Viking Pump case law, the Second Circuit remanded for the district court to recalculate damages.

Continue Reading Second Circuit Applies All Sums in Olin-OneBeacon Environmental Coverage Dispute Regarding Remediation Costs at Manufacturing Sites